A subdued year for the Australian IPO market

There was a marked deterioration in Australia’s initial public offering (IPO) market in 2023, with only 32 listings on the Australian Stock Exchange (ASX) for the entire year. This level in 2023 was 63 per cent lower than the 87 listings in 2022 and 83 per cent lower than the record-breaking number of 191 IPOs in 2021.

HLB Mann Judd’s annual IPO Watch Australia Report analyses IPO activity over the past 12 months on a number of key metrics, including listing volume, share price performance, industry spread and overall trends, as well as a review of the pipeline for the year ahead.

This year’s report found that 2023 had the lowest number of annual listings measured by HLB Mann Judd since it started the IPO Watch Australia Report in 2004.

Additionally, the year saw a decline in total funds raised. In 2023, $847 million was raised marking a 21 per cent fall compared to 2022 when the total funds raised amounted to $1.07 billion. It was also the first time since 2012 where the total amounts raised in ASX listings did not exceed $1 billion.

The macroeconomic and geopolitical environment both in Australia and across the globe, including high inflation and rising capital costs, presented significant challenges for most companies seeking to list. These challenging conditions, combined with poor investor sentiment throughout 2023, meant that an IPO listing was not an attractive or viable option for many companies during the year.

It was also considered a flat year for the global markets. According to S&P Global, the total global proceeds for 2023 amounted to $426 billion with 5,314 offerings, representing a 0.1% decline in capital raised compared to 2022. While activity in the US and Europe were subdued, the markets in Asia and the Middle East remained active in terms of volume.

Globally, the Materials sector raised $29 billion. At home in Australia, Materials accounted for 72% of all listings and raised $238 million. Mining and exploration activity continue to dominate the Australian market, driven by climate change targets, the shift toward green energy and electric vehicle batteries.

At the time of writing the 2024 IPO Watch Australia Report, there were only five upcoming floats were registered with the ASX. The highest amount being sought was just $10 million, indicating that the IPO market in the near term will continue to remain subdued.

However, the market outlook appears to be improving with expectations of interest rate cuts and the further taming of inflation. Moreover, the ASX recently stated there were several large IPOs waiting in the wings, which possibly includes the highly-anticipated listing of Virgin Australia. Meanwhile across the pond, well-known US companies such as Reddit, Stripe and Shein have also indicated they may go public once investor sentiment improves.

About IPO Watch Australia

First published in 2004, IPO Watch Australia is a benchmarking-based report. The research, led by HLB Mann Judd Perth, analyses Australian listing activity. The primary report is released in January each year, analysing IPO activity over the previous 12-month period. It includes commentary and data analysis on share price performance, sector analysis, IPO subscription rates, a review of activity by quarter and an outlook for the year ahead.